(Communicated by the Prime Minister's Media Adviser)
The Cabinet today (Sunday), 19 February 2012, was presented with the recommendations of the inter-ministerial steering committee that examined the management of state revenues from natural gas resources, pursuant to the 2011 Taxation of Oil and Gas Revenues Law
(the "Sheshinski Law").
According to the law, the state will establish a sovereign fund to manage revenue from natural gas resources, with the fund's profits being invested in strategic projects for the State of Israel. This is in order to ensure the efficient and wise utilization of natural resources without harming jobs and competitiveness in the economy, while taking a long-range strategic view and in order to provide lasting economic security for the State of Israel.
The team was appointed by Prime Minister, Benjamin Netanyahu, Finance Minister, Yuval Steinitz and Bank of Israel Governor, Stanley Fischer. The team was chaired by National Economic Council Chairman - and economic advisor to the Prime Minister - Prof. Eugene Kandel and included Bank of Israel Deputy Governor, Dr. Karnit Flug, Finance Ministry Budget Director, Gal Hershkovitz, Bank of Israel Senior Adviser, Barry Topf, Finance Ministry Accountant General, Michal Abadi-Boiangiu and Deputy Attorney General, Avi Licht.
According to the team's recommendations, approximately half of state revenues from oil and gas resources (incomes from the tax on excess profits) will be deposited in a fund that will invest abroad and will constitute a "security cushion" for dealing with national events with extraordinary economic implications such as wars, natural disasters, economic crises, etc. Pursuant to a decision by Prime Minister Netanyahu, the fund's profits will be devoted to designated projects in the fields of education and security, which will be approved by the Cabinet. Should an extraordinary event take place, it will be possible to borrow from the fund. The fund's assets will be managed, in accordance with rules that have yet to be determined, by the Bank of Israel under a supervision and oversight mechanism - to be led by the Finance Ministry - that will ensure maximum public transparency.
Detailed draft legislation on the management of the fund will be submitted to the Ministerial Committee on Legislation in the coming weeks.
Prime Minister Netanyahu said, "We began to deal with gas royalties with the Sheshinski Committee. Today, we will begin the discussion that will lead to the creation of a sovereign capital fund, the fruits of which will be allocated to Israel's vital needs, especially education and security."